Sony has lost over $3 billion on the PS3 | Hacker News Reader

Sony has lost over $3 billion on the PS3

videogames.yahoo.com

15 pointschaostheory23 comments

It's all those pesky scientists building HPC clusters from PS3s and not even playing games on them.

http://en.wikipedia.org/wiki/Playstation_3_cluster

I think they also lost money from people using it as a blue ray player. But they won the HD-DVD war which is probably worth a lot more than 3billion.

unfortunately for Sony, that's not the end of the format war. the bigger war is with downloads; both legitimate and illegal...

to be fair MS has also lost a considerable amount, plus this is the first time Sony has sold a console at a loss (Nintendo still hasn't done this yet).

I think it's going to be ~15 years before video downloads take over 50% of the DVD/Blue Ray market in the US so they have plenty of time to milk Blue Ray.

Some telcos seem quite intent on charging more for bandwidth than the cost of a film in a bargain bin. If telcos continue to strangle bandwidth then physical media will remain viable for a longer period.

Let's do the numbers:

Dual Layer Blu-ray capacity: 50 Gigabytes. Verizon FIOS - 20 Mb/s for $70/month, or 50 Mb/s for around $144/month.

So, how long would it take for a person on FIOS to d/l this?

@ 20Mb/s: 50000MB / (20 Mb/s / 8 bits/Byte) = 50000MB/2.5 MB/s = 20000 seconds. Which is ~333.3 minutes, or about 5.5 hours.

@ 50Mb/s, you have (20Mb/s / 50 Mb/s) * 5.5 hours = ~2.2 hours.

Yes, you're not going to get full speed, but even a factor of 2 slowdown is faster than waiting for netflix.

So, it seems that the network required to do this is already being rolled out. For example, Verizon market penetration is outlined in a recent press release [1], indicating that Verizon will offer these speeds to 10 million subscribers within the next week or so.

As you said, it may be ~15 years, but I think it will be a lot shorter - I'd guess 5-7 years. I can't imagine that comcast is sitting around while verizon makes inroads into their userbase. They will counter, driving prices down and increasing market penetration for these high speeds.

[1]: http://investor.verizon.com/news/view.aspx?NewsID=925

Fios might hit 20% penetration across the US in five years but it's only going to slow down after that. Today it's only in 16 states and Although the network already reaches 10 million homes and business, it will reach more than 18 million by 2010. so it's growth in availability is good but not all that extreme. And a lot of people who could use the service don't. Personally I would go with FIOS but I am dumping my 20Mb Comcast connection for 3Mb DSL because they keep messing with my line.

PS: Once they started to send RST packets on non BT traffic I decided to jump ship so that BR movie is going to be 37hours for me.

EDIT: I only point this out because if your business model assumes most people will have 20MBit connections in 5-10 years you’re going to be sadly mistaken.

Development costs of the PS3 must be huge, but I don't think its 'lost' money, the thing still has a shelf life of 5+ years at least.

How do you arrive at that estimate? I am guessing the PS3 technology is already outdated now?

Look at the average life expectancy of consoles over the years 5-6 years is about the right number. PS2 is still selling and it was released in 2000 but that is about as old as it gets.

Crap, I meant to upvote, not downvote, sorry. (I'm on an iPhone.)

I upvoted two of your other (great) comments.

Yeah but that might have been a lucky shot? PS2 maybe has a cult following because of the games, but what does the PS3 have to achieve the same?

PS sold 1995-2006, Original Xbox 2001-2005.

And don't forget the Microsoft/Nintendo/Sony are losing money on each machine only to make it up in game royalties (except for the Wii which actually sells at a profit), and games are still sold a couple of years after a platform is discontinued.

What about Wii technology? Would you call the Wii outdated? Its CPU, GPU, etc. certainly are. Does that make it a bad console? A bad investment for nintendo?

Nintendo was way smarter by focusing on the quality of the games. I assume someone buying a PS3 is more interested in the special effects than the gameplay, therefore they would be more likely to switch to more powerful systems. Just my wild guess, though.

I bought the PS3 because of blu-ray support, ability to run Linux and built-in wifi. If I was really a hard-core games and wanted latest and greatest special effects I would have built a desktop gaming machine. I expect the PS3 to stay relevant for several years, especially as programmers learn to better utilize the Cell processor.

I don't think you are a typical customer, running Linux. Cell processor, sure, maybe building clusters out of cheap used PS3s will remain relevant for a while, but that is also nothing that will earn billions for Sony. And even the cell will be improved upon or get competition (like graphic cards)?

I'm probably not the typical customer. I don't use Linux on the PS3 often however. I liked the capability to do so as I was planning to use Linux for Firefox but the PS3 browser is decent it has flash support (very nice way to watch youtube videos with a group of friends).

I also have an XBOX 360 and a Wii but I've never used either for anything other than games.

A loss at launch is typical for consoles. (The XBox was not profitable when it first launched, either.)

Still, 3bil is damn high.

You know what they say a billion here two billion there, pretty soon it adds up to real money.

The XBox still has not made a profit. MS has turned the corner where they aren't still losing money on every unit, but it looks unlikely they'll ever recover their losses on this generation console (the last generation was a money loser too).

They will cost-reduce it some more and with the further cost reductions, plus royalties etc. will end up making money. Remember as well, they are manufacturing massive volumes of Blu-Ray readers, which saves them money when they sell standalone BR boxes to home theater folks.

Does that make PS3 the new New Coke?

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